• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Cannabis

Cannabis Stocks Are Lighting Up Investors' Portfolios

ETF MSOS is seen as an opportunity to get exposure to stocks that are not yet U.S. listed.
By KATHERINE ROSS
Aug 19, 2021 | 02:30 PM EDT
Stocks quotes in this article: TLRY, CGC, CRON, ACB, MJ, TCNNF, PLNHF, MSOS

While still not legal at the federal level in the U.S., cannabis continues to take the investing community by storm.

Back in 2012, the cannabis sector was heating up thanks to legalization in states such as Colorado. Now, 18 states have legalized recreational use of marijuana, and Senate Majority Leader Chuck Schumer is pushing for legislation to decriminalize the weed.

Schumer's move would remove marijuana from the Controlled Substances Act and would introduce regulations to tax cannabis products.

When speaking to cannabis investors, the overall takeaway, not unsurprisingly, is that it's when cannabis is legalized, not if. Some investors even admitted that they're purely in the sector for profit, never having tried recreational marijuana before.

That includes retail investor Hal Lewis, who assured me that he's never been a user of cannabis though he lives in Florida. He explained his view saying, "If these companies can make huge profits with the current double-taxation 280e situation... and before it is even fully legal... they will go through the roof soon!"

And many investors are moving and adapting to find names within the sector that will not be as volatile as some of the "classic" cannabis names such as Tilray (TLRY) , Canopy Growth (CGC) and Cronos (CRON) .

How have these cannabis stocks performed? Year-to-date, only Tilray has stayed in the green, and it's up a whopping 58%. But in the past three months it's down over 12%.

Canopy Growth is lower by over 31% year-to-date, and Cronos has fallen 8%.

Companies like Aurora (ACB) , Tilray, Canopy, and Canada LPs are what the average investor thinks of when it comes to cannabis. But these companies will never sell products in the U.S. unless they acquire an MSO (multistate operator)/U.S. based firm.

So how are investors gaining exposure to the MSO space? One way is through (MSOS) , the AdvisorShares Pure US Cannabis ETF, which is down to $32 a share as of this week. Its 52-week high, which it hasn't hit since February, is $55.91

Back in April, Real Money's Tim Collins explained why these are attractive options for retail investors, writing, "We're overthinking cannabis investments. The United States is the market investors should hang their hat on. Yes, I believe there is a Canadian name and an international name to consider, but the multi-state operators in the U.S. have the biggest market and the biggest opportunity."

"My thinking is that the Canadian stocks are just internet meme stocks being played by kids on Robinhood," Hal Lewis told me. "I only invest in the MSO stocks in America... because as soon as we allow these companies to uplist to a real stock exchange (NASDAQ)... the institutional money is going to flow into them like crazy."

Real Money Pro's Doug Kass, author of the Daily Diary, still thinks there's an upside for this sector. Kass has written about cannabis multiple times recently.

On Monday, August 16, he suggested that readers buy the ETFMG Alternative Harvest ETF (MJ) and MSOS.

"With few institutional owners, the cannabis space may now provide the best upside reward vs. downside risk of almost any market subsector," Kass noted.

And then he later backed that up saying that the "sharp drop" in the space coupled with Tilray's announcement that it had taken a majority position in privately held MedMen - subject to legalization - caused him to believe that there could be a "basis for an improving near term price action in the cannabis sector."

MSOS, outside of Kass's recommendation, is seen as an opportunity to get exposure to stocks that are not yet U.S. listed.

As one Twitter user said, "I want access to those companies that will be selling products in the U.S. market. MSOS provides that. Because of our [ridiculous] laws in the U.S...These companies have to be listed in Canada and traded OTC. Thankfully AdvisorShares (MSOS) put together a product that allows U.S. retail investors to have exposure to the greatest growth opportunity on the horizon."

"Recently more U.S. [cannabis] companies have been added to exchanges. I added positions in the MSOS ETF, Trulieve (TCNNF) , and Planet 13 (PLNHF) . I like the exposure these provide for me. Everything always seems overvalued in the short term but long term I think it's all cheap compared to the potential return in the future," said Josh Pitts, a retail investor.

Interestingly enough, for investors looking for a catalyst in this space, one Redditor posted on WallStreetBets that they think the events in Afghanistan could benefit the case for cannabis legalization in the United States.

"With...NATO leaving Afghanistan, drug production is likely going to increase. If the U.S. government takes no action, some of it is likely to flow to the U.S. This will inevitably put pressure on legalization. Would the U.S. government prefer its citizens to buy homegrown (and taxed) cannabis, or finance the Taliban regime by buying its cannabis?" u/quantricko wondered.

u/quanitricko cited a UN report from 2021 which stated: "Afghanistan appears to be the second most important source country of cannabis resin worldwide, accounting for 18% of all mentions of the main 'country of origin' in responses to the annual report questionnaire in the period 2015-2019."

But even if that theory doesn't pan out, retail investors from all backgrounds are willing to stay "couch-locked" in MSOS and the MSO names until legislation pulls through on Capitol Hill.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from trading individual securities.

TAGS: ETFs | Investing | Markets | Politics | Stocks | Trading | Marijuana | Cannabis

More from Cannabis

Want to Invest in Constellation Brands? Wait for a Discount

Stephen Guilfoyle
Apr 6, 2023 11:10 AM EDT

The quarter wasn't great, but the guidance was promising.

Doug Kass: Cannabis Stocks Are Still Not SAFE

Doug Kass
Dec 20, 2022 11:15 AM EST

Though it is tempting, there are a host of reasons why I'm not bottom fishing.

Cannabis ETFs Could Soon Turn a New Leaf

Mark Abssy
Dec 8, 2022 1:11 PM EST

With likely passage of new legislation, the pot industry might have a remedy for the nausea it gave investors.

3 Market Sectors Are Likely to Be Most Impacted by the Midterm Election

James "Rev Shark" DePorre
Nov 8, 2022 6:22 AM EST

The focus is on positioning for the election and CPI Thursday.

I'm Monitoring a Cannabis ETF That's Showing Signs of Bottoming

Bob Byrne
Nov 7, 2022 8:04 AM EST

It's a dicey play as the price action isn't defined as yet and the ETF still could break lower.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:48 AM EDT CHRIS VERSACE

    Latest AAP Podcast With Portillo's CEO!

    Listen in as we talk with a rising star in the Chi...
  • 03:25 PM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Don't Just Sit There and 'Hope' for Your Stocks, M...
  • 07:32 AM EDT BOB LANG

    Webinar Thursday After the Close: Option Spread Trading

    Thursday, my good friend and colleague Sam DeMarco...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login